Alliance Contracting Pty Ltd v James

Case [2014] WASC 212


JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   ALLIANCE CONTRACTING PTY LTD -v- JAMES [2014] WASC 212

CORAM:   BEECH J

HEARD:   6 JUNE 2014

DELIVERED          :   19 JUNE 2014

FILE NO/S:   CIV 1022 of 2014

BETWEEN:   ALLIANCE CONTRACTING PTY LTD

Applicant

AND

LAURIE EDMOND JAMES
First Respondent

TENIX SDR PTY LTD
Second Respondent

Catchwords:

Administrative law - Prerogative writs - Whether adjudication under Construction Contracts Act 2004 (WA) should be declared to be invalid in part

Building and construction - Security of payment legislation - Scope of payment dispute - Whether counterclaim by contractor part of the payment dispute arising from payment claim by principal - Whether jurisdictional error by adjudicator

Legislation:

Construction Contracts Act 2004 (WA), s 31

Result:

Application dismissed

Category:    B

Representation:

Counsel:

Applicant:     Mr P G Clifford

First Respondent          :     No appearance

Second Respondent      :     Mr M N Solomon SC

Solicitors:

Applicant:     Lavan Legal

First Respondent          :     No appearance

Second Respondent      :     Corrs Chambers Westgarth

Case(s) referred to in judgment(s):

BM Alliance Coal Operations Pty Ltd v BGC Contracting Pty Ltd [2013] QCA 394

Cape Range Electrical Contractors Pty Ltd v Austral Construction Pty Ltd [2012] WASC 304

Cardinal Project Services Pty Ltd v Hanave Pty Ltd [2011] NSWCA 399; (2011) 81 NSWLR 716

Certain Lloyd's Underwriters v Cross [2012] HCA 56; (2012) 248 CLR 378

Craig v The State of South Australia [1995] HCA 58; (1995) 184 CLR 163

Diploma Construction (WA) Pty Ltd v KPA Architects [2014] WASCA 91

James Trowse Constructions Pty Ltd v ASAP Plasterers Pty Ltd [2011] QSC 145

Kidd v The State of Western Australia [2014] WASC 99

Kirk v Industrial Court of New South Wales [2010] HCA 1; (2010) 239 CLR 531

Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140

Newcastle City Council v GIO General Ltd (1997) 191 CLR 85

O'Donnell Griffin Pty Ltd v John Holland Pty Ltd [2009] WASC 19

Palgo Holdings Pty Ltd v Gowans [2005] HCA 28; (2005) 221 CLR 249

Perrinepod Pty Ltd v Georgiou Building Pty Ltd [2011] WASCA 217; (2011) 43 WAR 319

R v Young [1999] NSWCCA 166; (1999) 46 NSWLR 681

Re Carey; Ex parte Exclude Holdings Pty Ltd [2006] WASCA 219; (2006) 32 WAR 501

Re State Administrative Tribunal; Ex parte McCourt [2007] WASCA 125; (2007) 34 WAR 342

Seabay Properties Pty Ltd v Galvin Construction Pty Ltd [2011] VSC 183

The Wilderness Society of WA (Inc) v Minister for Environment [2013] WASC 307; (2013) 45 WAR 471

Thiess Pty Ltd v Warren Brothers Earthmoving Pty Ltd [2012] QSC 373

Thiess Pty Ltd v Warren Brothers Earthmoving Pty Ltd [2013] QSC 141

BEECH J:

Introduction

  1. The applicant (Alliance) and the second respondent (Tenix) entered into a construction contract.  Tenix made an adjudication application under the Construction Contracts Act 2004 (WA). In its response, Alliance contended that Tenix owned money to it. The adjudicator determined that there was a balance in favour of Alliance of…

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AGLC
Alliance Contracting Pty Ltd v James [2014] WASC 212
Case
[2014] WASC 212
Decision Date

CaseChat Overview and Summary

Alliance Contracting Pty Ltd was the applicant in proceedings before the Supreme Court of Western Australia, seeking to challenge an adjudication decision made under the Construction Contracts Act 2004 (WA). The respondent, James, had been involved in the adjudication process. The dispute centred on whether certain parts of the adjudication decision should be declared invalid due to jurisdictional errors made by the adjudicator. The applicant argued that the adjudicator had erred by considering a counterclaim by the contractor as part of the payment dispute and by failing to give effect to the decision that a balance was payable in favour of the applicant.

The court was required to determine whether the adjudication decision should be declared invalid in part or in whole due to the alleged jurisdictional errors. The applicant argued that only the part of the adjudication concerning the counterclaim should be declared invalid, while the rest of the decision should remain legally effective. The court needed to consider whether it was appropriate to sever the adjudication decision into parts and declare only certain parts to be invalid, or whether the entire decision should be quashed if any part was found to be affected by jurisdictional error.

The court held that once a court determines that an adjudication decision is affected by jurisdictional error, the entire decision cannot give rise to legal consequences. The court rejected the applicant's argument that only part of the adjudication should be declared invalid, finding that it was not open to grant the relief sought by the applicant. The court concluded that if the adjudicator had made the jurisdictional error alleged by the applicant, the adjudication was liable to be quashed in its entirety. Therefore, the court dismissed the application for relief in respect of the adjudication decision.

The court ordered that the application be dismissed and made orders for the exchange of affidavits and submissions on the question of costs, with that question to be dealt with on the papers. The court's decision was based on the principle that if any part of an adjudication decision is affected by jurisdictional error, the entire decision is liable to be quashed. The applicant's attempt to preserve the whole of the adjudication, except for the adjudicator's conclusion that he had no power to award a sum in favour of the applicant, was not successful.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

In BM Alliance Coal Operations Pty Ltd v BGC Contracting Pty Ltd[46] the appellant commenced proceedings for a declaration that the adjudication decision was void as a result of two jurisdictional errors. The primary judge upheld the appellant's case in respect of only one of the errors, but in the exercise of discretion refused to make the declaration of invalidity sought by the appellant. Instead, the primary judge dismissed the application upon an undertaking by the respondent to repay to the appellant the portion of the adjudicated amount in respect of which the adjudicator had made an jurisdictional error. The Court of Appeal unanimously upheld an appeal from that decision. The Court held that the appellant was entitled to a declaration of invalidity of the whole of the adjudication. Muir JA held,[47] that once a court determines that an adjudication decision is affected by jurisdictional error, the decision cannot give rise to legal consequences.[46] BM Alliance Coal Operations Pty Ltd v BGC Contracting Pty Ltd [2013] QCA 394.[47] BM Alliance Coal Operations Pty Ltd v BGC Contracting Pty Ltd [71] (Muir JA), [1], [90] (Holmes JA, Ann Lyons J agreeing). These cases present an obstacle to acceptance of Alliance's contention that the court can sever or in some other fashion find a part of the determination to be invalid but other parts to be legally effective. In oral submissions, Alliance sought to avoid a like conclusion in the present case by asserting that it did not rely on severance.[48] Rather, Alliance submits that it seeks only to impugn the erroneous part of the adjudication reasoning in which the adjudicator failed to take the last step of giving effect to his decision that there was a balance payable in favour of Alliance.[48] ts 17 ‑ 19. In my view, the adjudication cannot be divided into component steps in its reasoning, and one or more separate steps then impugned by judicial review. It is the adjudication that is liable to judicial review, not elements of the reasoning adopted in the adjudication. If the adjudicator made the jurisdictional error alleged by Alliance, the adjudication is liable to be quashed. The substance of what is sought by Alliance is to preserve the whole of the adjudication, except for the adjudicator's conclusion that he had no power to award a sum in favour of Alliance. I am not persuaded that it would be open to grant the relief sought by Alliance. For the reasons I have explained, in my opinion the adjudicator was correct in concluding that he had no power to determine that Tenix was liable to pay any sum to Alliance. Consequently, I would dismiss the application. On 19 June 2014, I dismissed Alliance's application for relief in respect of an adjudication made under the Construction Contracts Act 2004 (WA).[49] I ordered that the application be dismissed and made orders for the exchange of affidavits and submissions on the question of costs, with that question to be dealt with on the papers. These reasons deal with the question of the costs of the action.[49] Alliance Contracting Pty Ltd v James [2014] WASC 212